WTI $46.38 -26c, Brent $48.71 -44c, Diff $2.33 -18c, NG $2.45 -6c
Oil price
The oil price fluctuated quite a lot yesterday, WTI was down by $1.41 during the day but a good late rally as equities took a risk on approach to commodities left it actually up 36c on the post close board. Brent moved around a bit too, the November contract expired down 44c but the December contract closed up four cents and today is over $50. Those inventory numbers confirmed the API stats and showed a build of 7.6m barrels, seasonal maintenance I have been talking about brought refinery utilisation down to 86% but the gasoline and distillate draws were bigger than expected.
I suspect on Monday all might change when we see the China GDP number but in the meantime the last numbers I saw on how the Chinese were spending their money was tilted towards travel, building 100 new airports assumes some degree of fuel usage!
Schlumberger
3Q results from SLB yesterday proved that the period was worse than expected but that the company’s steps to adapt to the situation are also working to a great extent. Beating the whisper by just one cent, coming in with 78c was fine and the revenue at $8.5bn appeared about in line, free cash flow was up at $1.7bn showing some strength in this market. The business environment ‘deteriorated’ in the quarter but the cost reductions and business transformation programme meant that operating margins were ‘well above’ those seen in any previous downturn. Generating significant liquidity as shown by the free cash flow number is impressive in what the company describe as being an ‘increasingly challenging’ time for oilfield services companies as clients cut costs and take a conservative view on 2016 spending. So clearly not out of the woods yet but SLB is demonstrating significant resilience and an ability to adapt to the current circumstances.
Falkland Oil & Gas
FOGL has announced an operational update on its Humpback exploration well, 53/02-01 in the Southern Basin offshore the Falklands. They announce oil and gas shows with the possible presence of hydrocarbon bearing sandstones within the main target horizon and are now drilling deeper to evaluate additional targets. The well has taken an inordinate amount of time to drill and must be increasingly expensive which must be behind FOGL’s decision to be carried by Noble in the lower exploration for which they…
